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Fidelity Auto Roll Program

This program allows you to purchase certain eligible U.S. Treasuries and FDIC-insured CDs, then—once those securities reach maturity—arrange for the proceeds of the principal to automatically be used to purchase a similar security.

Eligible securities

Only Treasury auction securities or new-issue CDs with a term to maturity of five years or less are eligible for this program. Treasury inflation-protected securities (TIPs), inflation-protected CDs (CDIPs or IFCDs), callable CDs, floating and adjustable rate CDs, and CD purchases exceeding $250,000 are all ineligible, as are all other fixed income instruments and all secondary Treasury or CD securities. Auto Roll is not available for CD purchases in retirement accounts.

Auto Roll benefits

This program tracks the maturity dates of Treasuries and CDs and automatically keeps you invested according to your chosen asset allocation by purchasing similar securities when initial investments mature. While it helps you stay invested in bonds or CDs based on your criteria, you still need to pay attention to the program alerts so you can take appropriate action if necessary.

You have the ability to withdraw from the program at any time with no penalties, giving you complete control. This Auto Roll feature will continue to purchase a new security at the maturity of the older security unless:

  • You cancel the Auto Roll feature for that security.
  • You sell part of, or add to, the existing Auto Roll position.
  • There is a material change to the Treasury auction schedule.
  • Fidelity is unable to find a replacement new-issue CD that meets the initial size, duration, and coupon frequency criteria of the maturing security.

How to enroll

The Auto Roll Program allows you to sign up all or some of your eligible Fidelity accounts using a simple one-time process. After you agree to the Auto Roll Program Authorization and subscribe to the Fidelity Alerts Service on future eligible fixed income transactions, select Yes on the Auto Roll option displayed on the order entry screen to take advantage of this convenient feature. The subscription to Fidelity Alerts is a mandatory requirement of the Auto Roll Program.

Note: Once you enroll in the program and subscribe to the Fidelity Alerts Service, you remain enrolled until you opt out or until Fidelity cannot find appropriate replacement securities.

View detailed instructions and helpful images.

Frequently Asked Questions

  • How does the alerts feature work?

    As part of the Auto Roll Program, Fidelity sends out periodic alerts to remind you of your participation. We will notify you of subsequent Auto Roll security purchases that will be selected and other important activities. The alerts may be the only communication that Fidelity sends you with regard to the Auto Roll feature.

    Once established, cancellation of the Auto Roll alerts subscription will result in the cancellation of the Auto Roll Program for all securities in that account. Instructions on how to cancel your participation in the Auto Roll Program are included with every alert. To ensure you receive our correspondence, please be sure to provide us with an accurate email address for your account.

    The following alerts will be sent to you as part of the Auto Roll Program:

    Welcome alert – Sent at the time of enrollment, this alert welcomes you to the program.

    Maturing security alert – Provides you with details of the security to be purchased with the proceeds of the maturing security in the Auto Roll Program.

    Reminder alert – Sent approximately one month prior to a security’s maturity to remind you of your participation in the Auto Roll Program. This alert is only sent if the term to maturity is 13 months or greater.

    No security identified alert – Notifies you that Fidelity has been unable to find a replacement Auto Roll security meeting the correct size, term to maturity, and/or coupon frequency criteria. It will be sent approximately three business days after maturity date should Fidelity be unable to find a replacement CD.

  • What are the risks?

    Default risk – While your entire U.S. Treasury purchase is backed by the full faith and credit of the U.S. government, the FDIC protection of CDs is subject to FDIC limits. For more information, visit FDIC.

    Bank failure risk – If the bank from which you purchased your CD fails, your principal and accrued interest, along with other eligible assets you hold at that bank, are protected up to FDIC coverage limits, although you may face a wait to receive your money.

    Credit risk – Since Treasuries and CDs are debt instruments, credit risk is associated with their purchase. For CDs, FDIC insurance may help mitigate this risk. However, Fidelity makes no judgment as to the creditworthiness of the issuing institution and does not endorse or recommend the CDs in any way. Visit FDIC to learn more about FDIC insurance coverage and the availability of Bank Rating Services.

    Interest rate risk – Because purchases through the Auto Roll Program take place as Treasury securities and CDs mature, these purchases will reflect prevailing interest rates at the time of maturity. These rates may be lower or higher than those of your original security purchase.

    General liquidity risk – The secondary market for CDs is generally illiquid in nature. This can impact your ability to sell your CDs as well as the price received for that sale.

    Selling prior to maturity – Treasuries and CDs sold prior to maturity are subject to a concession, and may result in a substantial gain or loss due to interest rate changes and other factors.

    Inflation risk – The yield-to-call or to maturity of an investment made through the Auto Roll Program may not provide a positive return over the rate of inflation for the period of the investment.

  • How do I withdraw from the Auto Roll Program or cancel a purchase?

    Once you enroll, repurchases take place automatically when a Treasury or CD matures. You have the option to withdraw from the program, cancel the Auto Roll feature on a specific security, or to cancel the purchase of a specific security.

  • How do I withdraw from the Auto Roll Program and cancel all Auto Roll positions at one time?

    You can unsubscribe to all alerts. To do this, log in to Alerts at Fidelity and follow the steps to complete the request. If, within an account, Auto Roll alerts have been set up with multiple Social Security numbers (SSNs) or customer IDs (e.g., joint accounts, authorized users, etc.), it is necessary to unsubscribe from all SSNs or customer IDs within that account to cancel the re-investment feature on existing fixed income positions in that account. Upon deletion of every Auto Roll alert, the Auto Roll feature will be removed on every Auto Roll position within that account. Any future purchase of a fixed income security under the Auto Roll Program will require re-enrollment.

  • How do I cancel the Auto Roll feature for a specific security?

    You can cancel the Auto Roll feature for a specific security by contacting a Fidelity representative at 800-343-3548.

  • How do I cancel a purchase of a specific security?

    This can be done in two different ways.

    • You can call a Fidelity representative at 800-343-3548 and provide the CUSIP number of the Auto Roll security for which you would like to cancel the purchase.
    • You can cancel the purchase of a specific security by using the Cancel option when you receive your Maturing Security Alert from Fidelity. By using the Cancel option, you will be taken to the Open Order page where you can cancel the purchase.

    After you receive a Maturing Security Alert, you have a limited time to cancel the purchase of a specific security. For Treasuries, you can cancel the purchase up until the end of the day prior to auction date. For CDs, you have both the day of the alert transmission and the following day to consider the purchase of this selected security or to cancel the purchase.

    In some circumstances, a CD might post to the account within the purchase/cancel consideration period. In these cases, Fidelity will honor the cancellation request if you contact a Fidelity representative at 800-343-3548 and make such a request within the time limitation outlined above.

  • What is Fidelity’s detailed methodology for Treasury auctions and new-issue CDs?

    For Treasury auction securities, the U.S. Department of the Treasury currently offers the following durations that Fidelity makes Auto Roll eligible: 4-, 13-, 26-, and 52-week T-bills as well as 2-, 3-, and 5-year notes. For Treasury auction trades, Fidelity applies to Auto Roll security purchases the same face value and same term to maturity as the initial security. Only the maturing principal will be applied to any subsequent Auto Roll security purchase. No interest payments from these securities will be included in any Auto Roll security purchase. For example, if a customer initially purchases a $10,000 face value 2-year Treasury note, when that note matures, the maturing principal of $10,000 that would normally post to the account will be eligible to be rolled into the upcoming 2-year Treasury auction.

    All interest payments from the initial security purchase will post to the account and will not be included in the subsequent Auto Roll security purchase; any interest payments from future Auto Roll security purchases will similarly post to the account and will not be included in subsequent Auto Roll purchases. Finally, the Auto Roll feature will continue unless a customer cancels the Auto Roll feature for that security or there is a material change to the Treasury auction schedule.

    For new issue FDIC-insured CDs, the purchase will be based upon a series of requirements. The following hierarchy applies to this series of requirements:

    • Same Face Value – Auto Roll CD purchases will always apply the same face value as the initial customer security purchase. As noted above, only the maturing principal will be applied to the subsequent Auto Roll security purchase. No interest payments from these initially purchased securities will be included in any Auto Roll security purchase.
    • Similar Term to Maturity – Any Auto Roll transactions will require the purchase of another CD with a similar term to maturity.
    • Same Coupon Frequency – The next criterion requires the identification/selection of a CD with the same coupon frequency as the coupon frequency of the original purchase.
    • Yield – The final criterion applied involves a yield comparison. If several different issuer’s offerings contain all of these criteria, Fidelity will select the highest yielding CD among them since all new issue CDs offered by Fidelity are FDIC-insured.

      For example, if a customer purchases $5,000 face value of a 9-month new issue CD that pays interest monthly, upon maturity of that CD, the Auto Roll methodology will search within Fidelity’s available offerings to find another 9-month CD that provides monthly coupon payments. If it identifies two CDs matching all of these criteria, an Auto Roll $5,000 purchase of the higher yielding of the two will occur at/around maturity of the initial CD purchase.

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certificate of deposit (CD)

a debt instrument issued by commercial banks or thrifts to raise funds for business activities or to retire other debt; Fidelity offers a type of certificate of deposit called a brokered CD

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certificate of deposit: inflation protected (CDIP)

certificate of deposit: inflation protected have their principal amount adjusted periodically to reflect changes in inflation; if prices (as measured by CPI) have risen 3%, the principal amount of the investment will also increase by 3%

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Treasury inflation protected securities (TIPS)

a type of Treasury note that adjusts for inflation by providing inflation compensation in addition to the stated coupon the inflation component affecting the bond's principal is calculated based on the Consumer Price Index (CPI), adjusting it upwards for inflation or downwards for deflation

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Treasuries

debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and/or refund outstanding debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero-coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions

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maturity, maturity date(s)

the date on which the principal amount of a fixed income security is scheduled to become due and payable, typically along with any final coupon payment. It is also a list of the maturity dates on which individual bonds issued as part of a new issue municipal bond offering will mature

Questions?

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